Digital Business Networks with Barry Libert, CEO, OpenMatters
Digital networks - business, social, technical - define value in the modern economy and the best companies are exploring business models that take advantage of this new reality.
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Digital networks - business, social, technical - define value in the modern economy and the best companies are exploring business models that take advantage of this new reality. Our guest, Barry Libert, is a digital board member, technology investor, and strategic advisor to boards and their leaders seeking to benefit from the digital revolution.
Libert is the chairman and founder of OpenMatters, a technology (growth) investor and strategic advisory firm. He has spent the last ten years investing in and founding social, mobile, and big data technology companies. In 2001, he founded Mzinga, a social software and e-learning company.
His boards include (present and past): Innocentive, a crowd sourcing software company; Activate Networks (ANI), a big data analytics and services company; Zyncd a crowdsharing company, The Pulse Network, an social video company, Sonicbids, a social music marketing company, Parametric Dining, a mobile payment company, The SEI Center for Advanced Studies in Management and Networked Organizations at the Wharton Business School of the University of Pennsylvania and the Us Against Alzheimer’s Network, an advocacy network seeking to end Alzheimer’s by 2020 using today’s technologies. He is also a strategic advisor to a number of large enterprises seeking to leverage social, mobile and cloud technologies to drive revenues and reduce costs.
Libert has co-authored five books on the value of social networks, crowdsourcing and big data in business, healthcare and government. His fifth book, Social Nation, was published in the fall of 2010 by John Wiley & Sons. Barry Libert has authored 1,100 articles on the importance of digital technologies in organizations. These articles have covered strategy, people, processes, technologies, governance, and financial results. Further, Libert has researched the impact on risks from these technologies, as well the returns from social enterprise business models. His articles have appeared in publications such as Harvard Business Review (HBR), the Wall Street Journal, New York Times, Baron's, Institutional Investor, CIO Magazine and Mckinsey Quarterly.
Michael Krigsman:
(00:01) I’m Michael Krigsman and today I am joined by Barry Libert. Barry has been a serial entrepreneur, a very prolific author and writer. He’s an investor and really an extraordinary person and we’re going to be talking about digitally networked companies and digital transformation. Barry, how are you today?
Barry Libert:
(00:25) Good Michael and great to see you again.
Michael Krigsman:
(00:27) And likewise, so Barry give us a sense of the work that you’ve been doing and what are you up to these days.
Barry Libert:
(00:35) Well it’s been 20 years since you and I have been together. At the time that we meet I was working with a team which you just told me at Eccentra in Anderson on why different business models perform differently by people who make things that people produce, retailers, why logistic companies basically generate different types of returns than technology companies do. Lots of things have happened in 20 years since you and I met and now we’re focusing on how digital networks are changing your world, and what that means to everybody that is not.
Michael Krigsman:
(01:07) Barry why have you invested this effort in digital networks, what’s so important about that?
Barry Libert:
(01:13) Well if we simply just think about Uber or Airbnb or for that matter Amazon, Facebook, Google, any of these big platform companies they finally change the economics as we all know about. Traditionally companies made something, and sold them or retail or distribute it, and the same thing was true for technology.
(01:35) These new per-to-peer models, they’re over the web, they don’t need to own assets, they’re really just accessing you and me and what we own and that changes everything for everybody that’s not in that book
Michael Krigsman:
(01:47) So when you say that it changes everything, give us an example and can you be specific about the kinds of things that are changing.
Barry Libert:
(01:56) Sure, so when you think about what’s changing, historically when you build a taxi cab company, everybody knows the story with Über, you went out and got yourself another black car, limousine or taxi medallion and you hired another driver, very simple idea right. And you spent as much money as necessary to build a fleet of cars. The same is true with trucks or planes and anything else like that.
(02:20) Along comes the web and all of a sudden you could advertise that all, but now the digital web or the digital network that are being created on top of the web, which allows people to use their existing cars don’t own cars necessary. There is existing driving capability and to ride share, and share what they know and with who they know or someone else, without any new drivers, without any new cars. And the people who are making lots of money are who operate these digital networks, but you and I benefit to because now we can use our skills like we are doing on here and get paid for it.
Michael Krigsman:
(02:55) So what is the significance for established organizations, it’s very clear with startups what’s taking place, but how is this impacting existing companies especially larger ones?
Barry Libert:
(03:07) Well large ones are going to really deal with it soon. For argument sake large or incumbents really did have a leg up on upstart companies using a lot of venture financing they still have all the ‘assets’, the people, the employees, the physical assets that made todays or yesterday’s business models.
(03:28) But these new digital upstart called Unicorns or platform companies, they rely on what is called the excess capacity of the economy, and most people would say oh my God we are working at full capacity, but that’s not true right, otherwise there would be no Über. There are lots of cars available, and there is lots now on Facebook who own the (posts?) of their content.
(03:40) The existing incumbent companies have to say, where do we have assets, who do we know, what do you know that we can leverage that does not belong to us that we do not own, this is the access economy, not the asset economy, and if you think about it it’s customers as essentially freelancers to their company.
Michael Krigsman:
(04:13) So it’s changing the nature of the relationship between the buyer and the seller, but it’s also really changing fundamentally the relationship between the buyer and its employees and so therefore really the entire economic structure of the business.
Barry Libert:
(04:34) Correct, so when you think about those words you use, buyer and seller, company and employee, company and customer those are really good words in this prior non-digital network economy. It’s suggested that we live in silos and the company is the centre of the universe.
(04:51) In the network economy, the network is the centre of the universe. Now it’s all company to company competition, its network versus network, so the agenda is how quickly can you assemble a network. Because there is no doubt about it network economics are far more powerful, far more valuable, far more scalable than the old concept of economies at scale.
Michael Krigsman:
(05:15) Business models are at the heart of this is that not correct?
Barry Libert:
(05:22) That is correct.
Michael Krigsman:
(05:24) And you’ve identified in your research four different types of business models.
Barry Libert:
(05:29) Well we started to think about how did we think about every type of company not in which industry is and not industrial or transportation or financial services or publishing companies or health services. Those old connotations or designations worked really well in the industrial economy.
(05:49) But but when you have this – I’m going to use my hand here, this sort of horizontal economy emerging, this digital layer sitting on top of the industrial economy. Then all of a sudden what you can see is that companies like the big ones, the Googles, the Apples, the Facebook’s can stand every single industry, if you think about Google going with its driverless cars, like Apple moving into Apple health, right everybody moving into everybody’s industry that’s a platform company.
(06:19) Today, it’s not about the what type of business model are you and we found four. One, other people who build things, make things, sell things, distribute things, retail things and we call them asset builders. You know, you know them they’re BestBuy, GM, GE, Exxon Mobile, the big companies, Walmart of the yesteryear.
(06:46) Now all those companies are extraordinary presence today and alone, Walmart announced closing first time ever of 150 plus stores in the United States because they are under so much attack by these digital (Phetheans?). And Macy’s is struggling, department stores are down 40% this year alone and retail is up, right.
(07:06) So the asset builders in some shape or form are under attack. Not just by the digital world but by these networks that are taking effect.
(07:15) The second type of business which I call is a race to the bottom and no one likes to hear this is the service economy. No matter how you think about it there was a really great time when services were powerful, and we did outsourcing to India and China, but of a global world everybody is available to everything.
(07:34) And all of a sudden the services economy is how fast and how long can you work to make less. So, the services economy, I don’t care if it’s healthcare services, legal services, investment banking services, that’s a race to the bottom; very very difficult business model. So people make and sell time very hard.
(07:55) The third economy, or the third business model is the tech economy, making and selling what we think like Microsoft, really great example, salesforce dot com, even Google all these examples of how you can scale what you think versus what you do with yourself versus what you have. They’re fantastic businesses, highly scalable, highly valuable.
(08:17) And the most newest, it’s not the most newest but the most newest and most valuable are these digital networks, they’re infinitely scalable and they have what’s called the zero marginal costs. There is no additional cost for Über to add a rider or a driver and they can scale infinitely and produce extraordinary returns on the backs of existing access. And those are the for business models.
Michael Krigsman:
(08:45) And so these four business models again what are the implications for established companies who are looking at this and seeing their business at risk.
Barry Libert:
(09:00) Well let’s have a look at the economics in why they achieve and shift, and this is what the research spent the last five years looking at. For the asset builders they trade at one or two or less times revenue, that means a dollar of customer revenue is worth less than that same amount to investors. So if you get a dollar from customers investors will value your business at the same amount as you receive and invest.
(09:32) For services businesses because you don’t need as much capital assets or equipment, they will value a bit more, like two or three times revenues. Now, technology companies because you don’t need as much capital, or as many employees, or as much things are valued between four and seven times revenues. And network companies are worth between eight and 25 times revenues. That means these network companies can be more valuable and scale faster. For the asset builder that’s real problems, because if you have to work 8 to 25 times as hard to receive the same amount of value from a customer as you do that network companies do, you’re in big trouble.
(10:18) So the asset companies like GE, GM, Ford, you name it, Exxon mobile have to shift and have to shift now, and luckily people like Jeff Immelt are realizing, the CEO of GE that this is the time to shift. And what they are realizing they can be a network company to, but they have to put sensors in everything they make and do so that they can be the Internet of Things, they can be a network company of things and become a platform company in the digital age controlling everything they’ve ever made that everyone of us use.
Michael Krigsman:
(10:55) Barry, we have a question from Twitter Arsalan Khan is asking about how a company can become a digital network and what is the process or the steps through which they need to go.
Barry Libert:
(11:16) Okay that’s a great question, and it's the same thing all of our customers ask us and all our clients. There are really five steps to doing this, and we call them the five step pivot. We first step is to pinpoint. Most companies don’t even know which business model they’re in. They know which industry they’re in they can tell me there in the healthcare industry or their manufacturers or distributors all those industries, and I ask them that’s not the question. First, what do you do and they can tell me that they make or sell something. They hire people and offer services, they create technology or they’re already digital networks. So the first thing is to pinpoint who you are from the business model perspective.
(12:01) Number two is once you do that you need to inventory all and I’m going to call them tangible assets that you touch and feel. Take an example, Deloitte or Essentia, KPMG, they can count all their employees, but what they need to now do is count every one of their customers, I don’t mean the names of their companies, but there individual customers, and think about how you use those customers as freelance providers of insights including there (alumni?12:35). So number two is inventory everyone in their network, just like they would inventory there things and their people, they would inventory the edges of their network. Just like GE now inventory every piece of machinery used by customers.
(12:51) The third thing they do they begin to attach a value to it. They value it. They say, ‘wow my network has this amount of value’, whether it be big data value, insight value, knowledge value, service value, you value it.
(13: 07) Fourth step is you begin to operationalize it, you invest in the network. You build the platform that allows the network to interact. And the fifth thing and the final step is you create KPI’s, Key performance indicators allows you to track their performance.
Michael Krigsman:
(13:25) Barry when you talk about the platform a lot of the technologists, many of the people watching our technologists and so we tend to think about technology platforms, what do you mean by the platform.
Barry Libert:
(13:42) Well you know I am a technologist and I’ve been that for a long time but I think of platforms as a much broader scope than that. Obviously, just like GM or GE needs a platform and called their manufacturing facility, or a shop floor that makes something, that’s a platform for them to make things, just like Essentia needs for any of the health systems, needs a building for doctors to deliver service, I think of that as a platform.
(14:12) I think of Microsoft’s platform is its operating system, but in today’s role, I think a platform is about technology platforms which is the ones and zeros, the digital, mobile, social cloud of big data platform as a piece of it, but I don’t think technology is a platform as itself. For me a platform in this is all of the components, all the pieces of the nodes, the continuation of all the members of the network. Be them things or people that are connected to this technology infrastructure to make it in network platform. And that does not include things like AT&T, AT&T has always had a platform, a technology platform but never used it to build a digital network.
Michael Krigsman:
(15:00) So the platform then is people and technology together?
Barry Libert:
(15:08) It’s people and or things and technology together right, because you can imagine the Internet of Things, which is coming, or I was with a big company yesterday, the Internet of everything which is people and things coming. And they need both, they need the technology infrastructure to connect everyone and everything. But they also need to engage those people, because if Über had a mobile app and no riders and no drivers, they would not have a platform for anything other than a mobile app that would be like of many of the millions of mobile apps that exist today.
Michael Krigsman:
(15:43) So this way of looking at a platform also then has very significant implications for the relationship between the company and its customers, the company and its employees, the culture of the company because now when the nodes are technology as well as individuals, I would imagine many of the rules change.
Barry Libert:
(16:14) Correct I’m going to give you the numbers, approximately 30% of the world is freelancing already and I know the world wants to track employment versus unemployment and I think again a very weird way to think about it; you and I are freelancers. In fact my entire employment staff is freelance.
(16:29) And like then they want to remain freelancers right, and I think we need to think about the way we are moving forward in the network economy is not employed or unemployed but non-employed. I’m not using non-employed as it means the negative of employed; I mean you are choosing to be not employed because they want to be freelancing and here is the part that you were getting onto which is they want to be pro-creative. They want to be economic owners in their own datasets and their own contributions and this is going to change Google as as well to you and me right, right now Google owns all of our data; this conversation.
(17:08) In the future the things we procreate data with Google , we’re going to be smart to say, what are you talking about Google, that data belongs to me. We’re part of the node, we’re part of the network. We own along with Facebook the economics of our information set. So as the economics become procreated so does the ownership of those economics.
Michael Krigsman:
(17:29) So part of what will be happening is greater procreation, greater collaboration which again will have significant implications on the economic relationships between the customer and company itself.
Barry Libert:
(17:49) To your point it’s customer to customer. Think about the healthcare industry and right now I’m a patient, kind of, I figured out I’m an associate customer, and they own my data and that goes from one hospital to another hospital carrying my records, and that’s all inside a system called Epic. Well that’s not really true. I create my own health, both my health and my own diseases. I create my own conditions as do you and everybody else in the world.
(18:40) It doesn’t mean we are not influenced by what we eat or where we live, but we still create our own health. Well so far the healthcare industry hasn’t figured it out. We are procreators of our health, but the healthcare system and doctors. Like the new book says patients are not ready to see you, and that’s going to be a very different system where we are participants in our own health, and the doctors are going to have to economically assign the fact that we own our own health records, we control them, and if someone wants access to them a big company like Connecticut Healthcare group, they are going to have to pay us for it.
Michael Krigsman:
(18:48) Now you have use the term network orchestrator, tell us about that.
Barry Libert:
(18:55) So when we think about digital networks we think about those as network orchestration models, because we want to get away from the fact of network ownership. We don’t think Über owns its network. We don’t drive our own Tizi Network, basically it’s his own individual network you maybe accessing, the Über technology. The rider has his own network of friends and family members.
(19:18) So what we see in the future is that business leaders are nothing other than think of them as jazz orchestration meetings; everybody is doing in prompt, the person who is orchestrating that (inpormptination? 19:30) will be the most powerful orchestrator, because if he or she understands command and control doesn’t work for a freelance economy where 50% of us aren’t non-employed, not unemployed, non-employed and we will have non-managers with non-owners – a funny way of thinking about it and non-businesses.
Michael Krigsman:
(19:51) Again, let’s go back the how question. We’ve really been discussing a kind of analytic framework that you’ve put together for explaining or describing this networked economy that we see all around us. How do we get there, and what are the challenges for any existing business to move itself there, where is the resistance points.
Barry Libert:
(20:24) So in part of our research, we looked at over time 1500 companies of the last decade and touched on about 4600 companies over the last 30 years, and we publish this in the Harvard business news already, we found lots of resistance points, in fact we found 10. And those 10 resistance points are very simply different the first one we found was physical to digital.
(20:46) Most organizations think okay we just going to go on the rav, and what we found is that digital still remains an add-on to their corporate strategy, and our view of the world today there is no strategy that’s not digital. Every strategy is digital and every business is digital, and companies needs to get their heads around that and that was a really big point of resistance.
(21:07) But we also found a lot of resistance around the culture, the concept of closed culture, my employees, my company, my brand, my advertising, my marketing. Well, we don’t see that in the future. In a co-creative economy, companies are going to let their brand be adopted on YouTube and on the Internet, and people will carry their brands for them and co-create them around alongside with themselves and we found big issues around that.
(21:39) The third resistance was about assets versus access. Most leaders and boards still believe they have to own their employees. They have to own their suppliers, they have to own their assets, and they have to own their R&P, well we are big believers in open source right, in network economy. So going not outsource but opening crowd source is part of that, and you can see these are for big resistances. And the way we think about it is that leaders need to pull those levers, so that they can begin to move through the pivot and thinking how digital am I, how open and I, how asset versus access centric am I, and how co-creative versus you know owned.
Michael Krigsman:
(22:26) When you say asset versus access centric what does that mean?
Barry Libert:
(22:32) So when I look at a company the first thing that they tell me is what they own. But if I ask them what facilities they own, what real estate they own, what hospitals they own, they tell you about how many employers they employ and they own and if you say to them, how big and how many things do you access do you touch every day? What’s the inventory of those touch points? How many touch point’s do you have? How often and frequently do you touch all those touch points? And how do you keep track of of its sentiment or sensory perception, do you have sensors about the access point in which you have sold something. Like is my car company or even – my guess is if he was paying attention to this he’s on an iMac, and my guess he never was right now. But my guess is the light company I’m using right now, the utility, the table company, the chair company, none of them have any insight at all about points of access.
(23:40) So, I think to go forward, companies that are invested in hundreds of thousands of ownership and assets, to move into in network company and they have to start think in terms of access points, sensory perception and sentiment. And understanding of what goes sensory points and sentiment and access points are, but not just to the point of inventory data but getting to connect it all and making it all viable to each other.
(24:08) You’re almost sounding like a market here, but I know you are not just talking about the surface, when you touch about a touch point, marketers talk about touch points but what you’re talking about a deeper layer of operations.
Barry Libert:
(24:22) I'm not a marketer, it’s just not my game it never has been. I just graduated from McKinney Company, that’s where I learned it but I still am an Angel investor. I’m just not a marketer. I’m sure it’s got market strategies attached to it and that’s a regular connotation of marketers.
(24:40) But marketers are stuck to, they’re thinking about touch points like this way, how do we touch Michael to sell him more stuff? How do I advertise to Michael to get more feedback loop to sell him more stuff? How do I understand Michael sentiments so I can sell him more stuff? Now, that’s all very interesting and maybe in the context where Michael is a recipient of my value that touch point is powerful for an Omni-channel touch.
(25:12) But where Michael is now the customer of his own capabilities, his own creator, he’s his own marketer himself as a customer. That thesis is like gosh gag me; it’s a very old way of thinking about that. That’s why the advertising business itself is an old style business model called a service provider, and when you look at their economics there on a race to the bottom. Their part of the service economy. There in fact basic business model hasn’t changed since J Walter Thompson created the advertising industry, I don’t know 100 years ago.
Michael Krigsman:
(25:45) So when you talk about touch points it’s not from a marketing standpoint but it has to do with how the company organizes its operations?
Barry Libert:
(25:59) Correct, so think about this. You go into a local hospital and they asked me – and this happens to me regularly, they will ask me when I walk in to give me a band on my wrist and ask what you’re MRN is, which is called your medical record number. You get it and you go to your doctor’s office, he asked you again what’s your MRN, and asked you what your date of birthday is and asked again what your name is and I tell them this every time when they ask this question, Barry Libert, 1954, and it hasn’t changed since I was born that still my name. it won’t change between downstairs and upstairs. Not unless they use that sensor and know what my blood costs to understand blood pressure costs, who I am and how to make that part of my relationship with them and to give it back to me as feedback, so I can begin to modify my own behavior. I’m just a patient patient liberally that’s passive in their system.
Michael Krigsman:
(27:00) So what are the again, I keep coming back to the implications or the how. What is necessary for a hospital for example to transform itself, thinking about touch points emphasizing touch points, where do some of the tentacles of this go in terms of their operations?
Barry Libert:
(27:33) So think about this simply, for Beth Israel right here in town, Beth Israel Deaconess Or Max general, my guess is they don’t even know the number of patients they saw last year and most of the hospitals don’t. they don’t even know the number of unique yet and that true from every healthcare system within the United States, unique visits. More to the point, they don’t even know if I have a certain condition, who else in the hospital has the same condition, because their medical record system isn’t meant to do that and that would connect me with members of the network that have a similar condition. Now they would say HIPAA prohibits that. But we know that companies like patientsLikeMe a dot com company that I am willing to give up my rights under HIPAA To connect with other patients with similar conditions.
(28:15) It’s the way that hospitals have to change and say, okay I’ve got to focus on the piece, And I really mean this, which means Barry is the center of his own healthcare, how do I create and organize in principle rally him. I’m going to give him a sense to keep track of his daily activities. How do I then give some feedback at home instead of coming into the hospital, how do I then give him at home services like you and I are doing right now. How do I give him the data form in every decision he takes.
(20:48) Another good example is Joslin the leader in diabetics, they see about 27,000 people a year. I would say it’s harder to get into the Joslin and to get into Harvard; there is 1.4 billion people interested in diabetes. 350 million people have it, tell me how you get them to the Joslin? Do you think 350 million people are going to come to Boston? Have a vacation center.
Michael Krigsman:
(29:11) So that then, everything you’re describing now has implications for budgeting, for investment, for a job for the type of capabilities and the type of people that your hiring, your corporate culture so the tentacles go everywhere through the organization, the implications of this.
Barry Libert:
(29:36) We’ve spent hundreds of years building industrial organizations, and I don’t just mean the people who make things. I mean every major service or organization is a hierarchical organization, focused on the employees of who they are.
(29:50) We have just redesigned Joslin, we said Joslin should be a network of 350 million diabetic patients or pre-diabetic, letting them learn from each other, helping them around the homes around the world, connecting the network of doctors who have expertise to them, I don’t know, does Joslin need a building in Boston? Does he know what doctors there are in Boston? I don’t know, and I would argue it would be a very small part of what Doctor Joslin wanted 100 years ago was to end diabetes.
(30:23) And so my view is, every single organization needs to chart itself inside out to enable for the first time to network to be central of the universe and not the organization.
Michael Krigsman:
(30:35) And is what you’re describing digital transformation, I mean in a sense is everything what you’re talking about, the buzzword we hear so often, digital transformation?
Barry Libert:
(30:46) Absolutely, I think though the difference is digital is only half of the puzzle right. So being digital you can become software for a games company, and that’s one of the two digital transformations that you can do. If you’re a services company, you can you can find virtual property and become a software big data company, that would be valuable for a services company.
(31:06) And the same thing for an industrial company, you get the (unsure of the word 31:08) in social property and build technology around it which companies are doing, everybody is doing in silicon Valley, but that’s only half of the puzzle. That in turn turns you into tech creative Company you are for business models, it doesn’t turn you into a digital network, it just does not.
(31:28) So Google may never become a digital network like Amazon or Facebook because they may be centered on big data and never turn inside out. Although they tried to do this with Google hangouts and Google plus, they couldn’t after all get their DNA around the fact that they could be a big network and here’s a really, Microsoft has 2.2 billion users; you think they couldn’t be a great network company like Facebook? I don’t think they could be, but somebody has to talk to Bill Gates and Steve Ballmer, or even their new CEO in how they stop thinking about hardware and software.
Michael Krigsman:
(32:05) So the culture of the company and the mindset of the company are therefore the ultimate determinants.
Barry Libert:
(32:15) They’re the biggest hurdle as to getting there.
Michael Krigsman:
(32:19) How does the company overcome that?
Barry Libert:
(32:23) There’s an old expression from McKinsey where I trained which is as it’s easier to change the people than to change the people, which means that you can’t change anybody; we also the same. Now, I’m hoping they’re wrong and I’m hoping that you know Über is making an impact on every single company in United States and the world that says that’s the sign of the times, otherwise you will be obelized. And maybe they think they would be obelized. Maybe the retailers of the the department stores really talked in having to except a crate of Encyclopedia Britannica. That couldn’t happen with Amazon.
(32:56) But I think at the rate of which technology is changing, and the fact that you and I have our own hospital in our hands, right we can get our blood pressure checked, read our eyes, and you can put our fingerprint in here. But these things are our own retail stores our own hospitals, our own communications device, our own beam me up Scotty right from Star Trek. These are our future transponders, and maybe the guys who have not held back on this long maybe they will begin to get it and change.
Michael Krigsman:
(33:27) do you have other examples or obstacles that companies have hit as they are trying to make this change, and some of the solutions that they have used to overcome those obstacles.
Barry Libert:
(33:40) Sure, some of the big ones we see all of the time, besides strategy, and culture it’s governments, boards. One of the biggest things we run into is the average age of a board is somewhere between 62 and 72, about 90% plus are white men. If you think about that cohort there about as far away from the millennial’s who are bringing on this digital revolution as you can imagine. I mean there 40 years late. A lot is happened in 40 years, and I would argue boards do not get digital, and they don’t get networks, and they don’t get cocreation and they don’t get coownership.
(34:23) So I think what boards have to do now is to fundamentally think about what things like Starbucks did. They recruited board members who are in their 20s, and women to join their board, and I think now boards are going to have to do the same. They are not just going to diversify in terms of women and black which is important, they are going to have to diverse in terms of age, propensity, and skillset which will drive them crazy to have a bunch of their kids, sitting at their board tables, but those people who used to criticize for texting at the dinner table now have to be texting in the boardroom.
Michael Krigsman:
(35:03) And really are you talking about business science fiction or is this actually accessible to your average company, or is this simply the province of the 1% of the skillful most capable businesses in the world.
Barry Libert:
(35:20) Well that’s a really good good question. Our research says we’ve almost got it right, it’s about 2% right now and 98% are in some sort of journey. Now we’ve said the tech creators, which is about another 20% do get it and they’re on the move like Salesforce dot com or Microsoft dot com, google you name them. The tech guys are moving. They already have large user groups that are online. Apple gets it, they don’t need to teach about the value in that work right. Developer community they get it.
(35:35) If the service economy which has been the biggest driver of our economy for the last 15 to 20 years, and the industrial economy, the asset builders that are really getting crushed and if they don’t get it the networks going to ultimately own them.
Michael Krigsman:
(36:06) So there are these large parts of the economy, I mean just one of the most obvious is just look at the taxi industry, and it’s such a cliché but it’s very easy to point to but there are other major sectors of the economy that are undergoing people as well rooted directly in the set of dynamics that you’re describing.
Barry Libert:
(36:27) Service economy, look at something like nextdoor dot com or Gerson Lehrman Group I mean the service economy is under attack right, executive board, advisory board, they’re all attacking the services of economy. And you have PatientsLikeMe dot com that’s attacking the health care economy. Now you can use things like crowd sourcing right, which is everything from things like Realteammobile dot com all the newest crowd sourcing up-starts right. Web base banks are attacking even Jamie Dimon who is the CEO of Morgan Chase the largest bank by record is all aware that essentially all the financial institutions are under attack.
(37:07) So all the financial services economy, all the publishing services economy, all the information services economy, all the industrial economy there digital networks starting up in every segment. It’s only a matter of time which (speed?) they go and by the amount of capital they’re receiving from the venture world until everybody’s margins are (Unclear is it monetized? 37:27)
Michael Krigsman:
(37:41) And boards, what advice do you have for Boards of Directors and is it even practical for a board populated by let’s just say middle aged white men, I’m a middle aged white man to make this shift with a narrow focus, narrow blinders and short term focus, is that even possible?
Barry Libert:
(37:55) Well there was a woman who was the CEO of DuPont who was my classmate at Tufts and you can see what’s happening with the CEO of Yahoo, I mean it’s great about activist investors now if they know what the venture communities doing, and it’s only a matter of time before they outsource these CEOs.
(38:14) So you know the advisor to Ellen who is the CEO at DuPont and I can say it’s not going to work. You can’t drive organizations to be top down, even big industrial teams. whether it be the social network which is the media network of the consumers or the active investors who attack from the top, or social networks who attack from the bottom. No board and no CEOs are (safe? 38:41) anymore from these networks that are emerging. Investor networks, social networks, civil employee networks it’s just you can’t do it anymore. You can but without much authority for much longer.
Michael Krigsman:
(38:55) And the timeframe, what are the timeframe horizons that you’re looking at?
Barry Libert:
(39:00) Nothing goes as fast as I talk about, and I’ve been talking about this as long as you’ve known me in the 90s, heard about it in the Wall street journal, New York Times, nothing goes that fast. So my guess I’m dead by the time this takes place or maybe you know the next 10 or 20 years.
Michael Krigsman:
(39:15) And I have one last question, you have written I think five books along with a thousand articles that you’ve published in major publications, how in the world do you do that?
Barry Libert:
(39:31) Well my thesis is no one is paying any attention to these recent (Unclear 39:35) have shown up. We have finished writing our sixth book called The Network Comparative with Harvard Business Press. It will be released in June. It covers all these topics, we’ve written articles on them (dropped sound 39:47) them. But we’re very excited now that Harvard Business Press and Harvard business Review obviously a vast and amazing publications and tradition believes the same of what we were talking about today, that the world as we know it is changing.
Michael Krigsman:
(40:03) Well Barry Libert thank you so much. You have been watching episode number 150 and we have been talking about a perspective on the digital economy. Barry thank you so much for taking the time to join us today
Barry Libert:
(40:19) Michael thanks for having me today.
Michael Krigsman:
(40:20) And everybody please come back next week and we will see you then bye bye.
Companies mentioned in today’s show
Airbnb www.airbnb.com
Amazon www.amazon.com
Apple www.apple.com
AT&T www.att.com
Deloitte www.deloitte.com
DuPont www.dupont.com
Essentia www.essentia-analytics.com
Facebook www.facebook.com
GE www.ge.com
Gerson Lehrman Group www.glg.it
GM www.gm.com
Google www.google.com
JPMorgan & Chase www.jpmorganchase.com
KPMG www.kpmg.com
Macy’s www.macys.com
Microsoft www.microsoft.com
Nextdoor www.nextdoor.com
OpenMatters www.openmatters.com
PatientsLikeMe www.patientslikeme.com
Starbucks www.starbucks.com
Über www.uber.com
Walmart www.walmart.com
YouTube www.youtube.com
Barry Libert: www.barrylibert.com
LinkedIn www.linkedin.com/in/barrylibert
Twitter https://twitter.com/barrylibert